Fast growth of free wi-fi makes fee wi-fi a tough sell

Retailers looking to provide wi-fi hotspots to consumers better justify them on the basis of higher sales rather than on fees for wi-fi Internet access, says a new study from researchers Frost & Sullivan.

Retailers looking to provide wi-fi hotspots to consumers better justify them on the basis of higher sales rather than on fees for wi-fi Internet access, says a new study from researchers Frost & Sullivan. “The phenomenal growth of hotspots available to the consumer for little or no charge makes it difficult for providers to justify service charges, resulting in lower revenues for the wi-fi hotspot services markets,” Frost & Sullivan says in its new report, U.S. Wi-Fi Hotspot Services Market.

A number of retailers, including Starbucks Corp., Borders Group Inc. and McDonald’s Corp., are making wireless Internet access--known as wi-fi for wireless fidelity--hotspots available to customers for a fee. Others, such as Schlotzsky’s Deli, are offering free access.

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Although wi-fi revenues totaled $18 million in 2002 and are projected to reach $1.4 billion by 2009, “the proliferation of free hotspots--over 600 across North America in 2002--makes the customer price conscious, therefore making it more difficult for providers to expand Wi-Fi services,” the report says. Freenets--large community or civic wireless networks--threaten to render wi-fi hotspots redundant as their coverage increases, the report says.